Merciful Industries Has a Beginning PBO Balance of $500,000 and a Settlement

question 85

Multiple Choice

Merciful Industries has a beginning PBO balance of $500,000 and a settlement rate of 7%. As a result of an amendment to the current union contract, there are prior service costs of $46,500. What is the journal entry to record amortization of the prior service costs for the second year, assuming that the company uses a 5-year amortization period?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Pension Expense } & 3,255 & \\
• \hline \text { Projected Benefit Obligation } & & 3,255 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Pension Expense } & 35,000 & \\
• \hline \text { Other Comprehensive Income } & & 35,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Other Comprehensive Income-Prior Service Costs } & 9,300 & \\
• \hline \text { Projected Benefit Obligation } & & 9,300 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Pension Expense } & 9,300 & \\
• \hline \begin{array} { l }
• \text { Other Comprehensive Income-Prior Service } \\
• \text { Costs }
• \end{array} & & \\
• \hline
• \end{array}\]

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Definitions:

Metacognitive CQ

refers to an individual’s level of conscious cultural awareness and control when interacting in different cultural contexts.

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Pertains to the cognitive processes involved in planning, problem-solving, and decision-making in the brain's prefrontal cortex.

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The understanding and appreciation of cultural differences and similarities within, among, and between groups.

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The act of judging another culture based on the standards and values of one's own culture, often accompanied by a belief in the superiority of one's own ethnic group or culture.